Offshore online business - taxation?

Hello,
I am intending to start an international online business, doing it
from the U.S. primarily in Europe. All sales will be done outside U.S.
and goods will be purchased and sold outside U.S. The only think I
will have in U.S. is the bank account. Now, can anyone help me find
out how much taxes and on what will I have to pay in U.S.?
Also, what kind of business entity should I rather form - LLC, Sole
prop. or something else, in order to pay less taxes in U.S.?

You've got a curious question for the situation you are describing.

Why are you forming a USA entity? The first critical element to understand is that if you form a USA entity to conduct all of the operations of this enterprise, then it doesn't matter who you sell to, where the servers are, where the inventory is, or where the bank account is. All operations will be considered USA source income and subject to USA income taxes. Comparatively, you could structure the entity anywhere else in the world, and only pay USA income taxes on the cash you bring into the USA.

Assuming you will form the USA entity, what State are you in? Are you in a State that recognizes S-corporations? Are you in a State that has additional taxes on LLCs? What is your exposure for liability in these transactions? How much do you plan to make in the first year, and in year 5? What retirement options and fringe benefits would you like?

Assuming you will form a foreign entity to manage all the operations, and you only receive a paycheck or dividend check from the foreign entity, then you may or maynot want to form a USA entity at all. What other businesses are you in? What is your lifestyle like? Can we use any of your other activities to mitigate your tax responsibilities? What country would you form the foreign entity in, and what tax treaties are relevent?

What I hope to convey in this answer is that there are too many factors to consider for this question to provide a great or best answer that will work for you. You should spend the time and money to sit with a CPA or attorney experienced in international business transactions to discuss structuring this to your lasting benefit.

If you are a US Citizen and living in the US, you are required to file US income taxes regardless of where your business is located or where you purchase/sell products. Take GE for example. I would suggest you open a business account and not intermix your personal and business money.

An LLP would only be a consideration if you intended to have a least one limited liability partner in your business idea. Corporations are extremely complex when it comes to taxes and by far are the most expensive to set up. I'm not a tax professional and would recommend you speak to one or a CPA concerning your situation. Sole proprietorship is the simplest form and would avoid the double taxation issue common with corporations. This is completely incidental and has no bearing on where your target market is located.

Whatever you file on your tax return as your legal business address (which may be your home residence), your citizenship status, and the type of business you decide will have the most impact on your taxes.

US citizens living and working in another country are entitled to a personal exemption of the first $85,000 of income for Federal Tax purposes as of 2005. This year could be different.

Any financial accounts you hold in the US will have interest reported to the IRS by the financial institution in accordance with law. There are legal ways to minimize taxes, but not skirt them entirely. Just ask Wesley Snipes who is on the hook for $12 million of unpaid taxes to the IRS. It's not worth the risk. Talk to a financial planner. It is well worth the money.